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FCA Issues Statement on Its Role in Preparing for Brexit

ByRegulatory News

June 27, 2018

FCA issued a statement that provides stakeholders with an update on how it is preparing for the UK leaving the EU. As part of the Treasury's approach, EU member states will be treated as third (non-EU) countries—although there are instances where the Treasury would deviate from this general approach, including to provide for a smooth transition. FCA is taking the same approach. This will ensure that the requirements FCA is responsible for are consistent with the wider legislative framework. In certain cases, FCA may deviate from this general approach where this is necessary to ensure a smooth transition to a new regime, or to otherwise support its strategic and operational objectives.

FCA continues to prepare for a range of scenarios, including the one in which the UK leaves the EU on March 29, 2019, without a withdrawal agreement and the implementation period having been ratified between the UK government and the EU. The EU (Withdrawal) Act will transfer and convert the existing EU law at the point of exit into UK law. It also gives powers to ministers to make secondary legislation to amend this legislation to ensure that it functions effectively when the UK leaves EU. As part of this, the Treasury intends to task FCA with amending and maintaining EU binding technical standards (detailed EU rules). These rules sit underneath EU regulations and directives and provide technical detail of how those requirements must be met.

FCA will also be amending its Handbook to ensure that it is consistent with changes the government is making to the EU law and it functions effectively when the UK leaves the EU. In the run up to March 2019, FCA will limit Handbook changes unrelated to Brexit to those identified as core priorities in its Business Plan as well as other essential items. FCA plans to consult on these changes in the Autumn, subject to the Treasury’s timelines for Statutory Instruments. FCA also plans to consult on the rules that will apply to firms in the temporary permissions regime.

European Parliament published a report that provides a concise overview of the Dodd-Frank Act, the challenges of its implementation, and efforts to roll back the Act, in large part due to what are viewed to be vague and impractical provisions.